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  <h1>New products, markets, distribution channels, and the possible sources of data</h1>

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   <p>Actuarial practice is the subject that makes you happy everyday.</p>
   <p> In answering all the questions, notice the following tips. </p>
   <ul>
     <li>For all the questions, you need to state Basic fact + explanation.</li>
     <li>Provide enough details is rather important. </li>
     <li>Even for a “list” question, more explanation is needed than that.</li>
     <li>Give example where appropriate</li>
   </ul>

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    Poinsts to consider with regard to a new product.
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      <ul>
        <li>
          The company will have no brand or reputation in this particular market segment. Thus, the company may experience lower levels of new business than for the current whole life contracts.
        </li>
        <li>
          The company should undertake sufficient market research to establish that there is demand for this product, and that it would be regarded as a credible product provider.
        </li>
        <li>
          Extensive research and development costs
        </li>
        <li>
          Advertising costs, these costs need to be recovered->higher expense loading
        </li>
        <li>
          Systems/sales procedures may need to be changed
        </li>
        <li>
          Sales force need to be retrained
        </li>
        <li>
          Seek advice from the reinsurer
        </li>
        <li>
          <span class="highlight">No directly relevant data-> increase risk, increase margin, less competitive, higher chance of getting wrong</span>
        </li>
        <li>
          Lower price to stimulate demand
        </li>
        <li>
          In the end, the level of competition will determine the level of price.
        </li>
        <li>
          May be a loss leader: One use of a loss leader is to draw customers into a store where they are likely to buy other goods
        </li>

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      Data sources
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        <span class="highlight">You will need to justify the relevance of such data. Allow for a, b, c. </span>
        <ul>
          <li>
            Historical data, but assumptions need to reflect expected future experience, relevance of past data to future projections must also be balanced against the need for sufficient data for its analysis to be statistically credible.
          </li>
          <li>
            More significant emphasis on more recent data to allow for the trend
          </li>
          <li>
            Standard tables industrial data (CMI)
          </li>
          <li>
            Reinsurance data
          </li>
          <li>
            Medical profession data (Because the morality data is significantly affected by medical advancements, it will be necessary to consider the views of doctors and other healthcare professionals to understand the range of views about future medical advancements when determining the range of potential future changes.)
          </li>
          <li>
            Other industry/national statistics, but the relevance becomes weaker
          </li>
          <li>
            Own contracts’ experience
          </li>
          <li>
            <span class="highlight">Actuarial consultancy</span>
          </li>
          <li>
            Past trend for assets, allow for future economy outlook
          </li>
          <li>
            Future tax rate: use any available government economic forecasts
          </li>
        </ul>
        In using the past data to project future mortality, the actuary needs to deal with
        <ul>
          <li> abnormal fluctuations
          </li>
          <li> changes of the experience with time
          </li>
          <li> random fluctuations
          </li>
          <li>  changes in the way in which the data was recorded
          </li>
          <li> potential errors in the data
          </li>
          <li> changes in the balance of any homogeneous groups underlying the data
          </li>
          <li> heterogeneity with the group to which the assumptions are to relate
          </li>
          <li>effects of economic changes
          </li>
          <li> effects of healthcare and lifestyle changes
          </li>
        </ul>

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      Data check
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        <ul>
          <li>
            reconcile current data with that used at previous valuation
            <br>
            consider number of policies, sums assured, premium income
          </li>
          <li>
            individual checks on any unusual data points
            <br>
            very young or very old ages for policyholders, very high or very low levels of benefits or premiums may uncover systematic data entry errors
          </li>
          <li>
            individual spot checks
            <br>
            For a random sample of policies, verify that data held on system corresponds to original application form.
          </li>
        </ul>
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  <p> Author: Mengke, Lyu</p>

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